The pleas from mortgage industry groups to sideline the GSEs’ Home Valuation Code of Conduct (HVCC) continue.

Marc Savitt, immediate past president of the National Association of Mortgage Brokers (NAMB), joined by a group of more than 20 appraisers and mortgage brokers, hand delivered a petition last week to the Broadway office of New York State Attorney General Andrew Cuomo, in an appeal to eradicate HVCC.

The 120,000-plus names on the petition pages were penned by both mortgage industry professionals and consumers who say the new appraisal rule has prolonged and distorted the process of purchasing a home.

Savitt also presented Cuomo with a key piece of evidence to support his request for the termination of HVCC: a recent fraud report from Interthinx. According to the research and analytics firm, mortgage fraud related to property valuation has increased 25 percent since HVCC was implemented.

The findings of the Interthinx report were a direct contradiction to statements by Cuomo and the GSEs that such fraud was on the decline. Interthinx’s study documents a considerable shift toward schemes involving short sales, REO inventories, and refinancing by borrowers whose equity has been impaired by falling real estate values, and forecasts that property valuation fraud will continue to be the most-perpetrated type of mortgage fraud.

“The HVCC has created a dysfunctional system that is holding back the housing recovery,” NAMB said in a recent press statement. “Incompetent, low appraisals not only hurt individual sales, but depress property values in entire neighborhoods unfairly.”

Realtors have joined NAMB in its crusade against HVCC. In a survey conducted by the National Association of Realtors (NAR), 85 percent of appraisers reported a perceived reduction in appraisal quality. In addition, 76 percent of Realtors said they had experienced an increase in appraisal time since the HVCC rules were enacted last May.

The GSEs and supporters of the new appraisal rule, on the other hand, say it has eliminated undue influence, coercion, and conflicts of interest on appraisals.
As “DSNews.com reported last month”:http://www.dsnews.com/articles/controversial-hvcc-faces-termination-with-house-amendment-2009-10-30, the controversial HVCC could be on its last leg. The House Financial Services Committee has attached an amendment to its Consumer Financial Protection Agency (CFPA) Act of 2009 that would terminate the GSEs’ rule and replace it with a new set of industry-wide appraisal regulations created by the director of the CFPA.